Macroeconomics
10th Edition
ISBN: 9781319105990
Author: Mankiw, N. Gregory.
Publisher: Worth Publishers,
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Question
Chapter 14, Problem 5PA
(a)
To determine
The change in money supply and impact on GDP,
(b)
To determine
The change in money supply and impact on GDP, unemployment, and inflation.
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Check out a sample textbook solutionStudents have asked these similar questions
a) Consider an AD-AS model with Static Expectations. Show how changes in monetary policy generate short-run movements in output.
(b) Consider an AD-AS model with Rational Expectations. Show how changes in the unanticipated component of monetary policy generate short-run movements in output.
(c) Explain how overlapping wage contracts generate persistence in output when there are monetary policy shocks.
Determine the impact of the each of following types of shocks on output and inflation in the short-run and long-run. (Use AS-AD-LRAS curves to illustrate your reasoning).
A decline in consumer confidence.
An increase in inflation expectations.
An increase in export demand.
In a certain economy, the Dynamic Aggregate Supply (DAS) line is represented by the function
=
-
π₁ = Ę ₁ = ₁ π + α ( Y₁ − Ÿ) + D and the inflation expectations formation mechanism is adaptive, that is,
E₁+1 Absent a supply shock (v₁ = 0), in a figure representing period t inflation rate, π, on the
vertical axis, and period t output, Y₁, on the horizontal axis, the period t DAS line will pass through the
pair of points, :
OA. (-1)
B. (α, Y)
○ C. (Y)
D. (πt, Yt)
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